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A Yorkshire coal mine in 1838. When a storm caused a river by the Huskar colliery to burst its banks, 26 children who were working in the mine drowned. With a nation in shock, Queen Victoria ordered an inquiry. Four years later, the Mines Act prohibited women and boys under ten from working underground in mines. In a past with little visibility – literally in the pitch blackness of the mines – regulation worked slowly but surely to protect society’s most vulnerable.

Around the world, regulators are fining and firing off cease and desist letters to these startups. In US cities like Miami and Austin and European ones like Berlin and Hamburg, local regulators are clamping down on ride-sharing apps like Lyft and Uber. Regulators are also giving Airbnb heat in its own backyard of San Francisco. Well they might act, for the startups promote activities that clash with legislation and permitting and insurance requirements.

But in the UK, reform is being ushered in to allow these new business models. In London, renting out a home for under three months through a website like HouseTrip, onefinestay or Airbnb still requires planning permission under a 1973 law. But if the deregulation bill, now in the House of Lords, is passed in full, it will remove these limitations.

Why are the UK regulators lightening up? eBay was the first business to show that peer-to-peer models exhibit an extraordinary capacity to self-regulate. On these new platforms, users often log in via social media accounts so they have no aliases to hide behind. They then self-regulate via an online reputation system of reviewing and commenting that rewards good behaviour and flags up and punishes bad behaviour. By contrast to the opaque world of finance, this transparency keeps people in line.

What about those who the system does not keep in line? On top of the incentives for marketplace participants, the platforms themselves are incentivised to kick off the bad actors. If a diner gets ill on a peer-to-peer dining platform like EatWith, their negative review is likely to lead to more decisive action than if it were reported to a government agency – if it were reported. Hitting one star on an app is easier than filing complaints.

Regulation will not go away, nor should it. Consumers should not always be able to try cheaper, less-regulated services if they do not understand the risks. The photos on a home swapping site like Knok do not reveal if the home is safely wired. Nor can we always rely on startups to self-regulate when they pursue growth at all costs.

Still, compared to five years ago – let alone a 19th century coal mine – the world is lighter than ever. The world’s regulators should follow the UK’s lead and lighten up too.

Alex Stephany is the CEO of JustPark and the author of a forthcoming book on the sharing economy. You can follow him on Twitter @alexmstephany

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